Investing.com — Lowe’s (NYSE:) reported first-quarter net sales that beat analyst expectations as the DIY retailer got a boost from growth in its online offerings and services for professionals.
The company’s shares were lower in early U.S. trading on Tuesday, erasing pre-market gains. Lowe’s indicates operating margins are likely to be under pressure during the current quarter, Reuters reports.
Like other major chains, Lowe’s is being affected by customers choosing to delay purchases of expensive items needed for home improvement projects during a time of high inflation and high interest rates.
However, the company said this decline in discretionary spending was partially offset by positive comparable sales in its digital store and Pro option, which targets contractors.
Chief Executive Marvin Ellison added that Lowe’s has captured “market share in key categories” after rolling out a new nationwide loyalty program and expanded same-day delivery options.
The North Carolina-based group’s net sales came in at $21.36 billion in the three months ended May 3, down 4.4% from the same period a year ago. However, the total was above Bloomberg consensus estimates of $21.13 billion.
Diluted earnings per share fell to $3.06 from $3.77 a year ago. Operating margin fell to 12.4%, slightly above Wall Street estimates of 12.3%.
Lowe’s also reaffirmed its full-year outlook, with Ellison noting that it is “pleased” with the start of its spring performance. Annual revenue is expected to be between $84 billion and $85 billion, while diluted earnings per share will be $12.00 to $12.30.
“[T]These results demonstrate that Lowe’s is performing well in a tough revenue environment, leaving the company poised for improved profitability when the home improvement market turns,” Morgan Stanley analysts said in a note to clients.
